Philly Fed President Praises Blockchain's Authentication Abilities

The Federal Reserve Bank of Philadelphia became the latest arm of the US central bank to discuss the impact of blockchain this week.

Apr 5, 2017 at 5:26 p.m. UTC
Updated Sep 11, 2021 at 1:13 p.m. UTC

The president of the Federal Reserve Bank of Philadelphia weighed in on the possibilities of blockchain tech in a new speech this week.

Entitled Fintech: Revolution or Evolution? and presented to engineering students at the University of Pennsylvania, the talk found Philly Fed President and CEO Patrick Harker lauding the technology for its "tremendous potential".

Further, Harker suggested he believes blockchain could become a way banks and institutions more effectively manage risk in the future.

He told the audience:

"From my perspective, however, its real value is in authentication, not on distributing a virtual currency. And the implications of having a distributed ledger that offers virtually failsafe data storage are huge on the risk management side for any business."

Still, it was clear from the remarks that Harker believes blockchain will ultimately become an enabling platform for existing incumbents.

For example, he argued fintech companies will never completely disintermediate trusted third parties and brokers of money.

"Likewise, no matter what happens in the world of fintech, you still need a trusted broker of money. The roles may change and adapt, but someone needs to be the source of funds and credit," he said.

Elsewhere, Harker was more bearish on the idea of a digital currency operating outside of the purview of the government.

"On the other hand, one of the things you’ll see with digital currency is how wildly the value swings. The question is, 'Will there ever be a digital currency that is stable enough to become as widely used as a government one?' he said.

He further argued that privately held digital currencies would perhaps be unable to manage a large money supply, adding:

"Unless a government issues it, the answer is likely that no, digital currencies won't drive out our own any time soon."

Image via Shutterstock

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